CITIZENS FINANCIAL SERVICES INC

Our Annual Incentive Plan is designed to recognize and reward participants for their collective and individual contributions to our success. The objectives of the Annual Incentive Plan are to: (i) reward results, not effort; (ii) align our strategic plan, budget and shareholder interests with participant performance; (iii) motivate and reward participants for achieving and potentially exceeding performance goals; (iv) align incentive pay with performance; (v) enable us to attract and retain the talent needed to drive our success, and (vi) encourage teamwork across the Company and Bank. The Compensation/Human Resource Committee in consultation with executive management administers the Annual Incentive Plan. All of our named executive officers participated in the Annual Incentive Plan during 2024. The Annual Incentive Plan awards (if any) will be paid out in cash and grants of restricted stock in accordance with the terms of the Annual Incentive Plan to all of our named executive officers except for Messrs. Black, Wilson, and Jones who has reached retirement eligibility.

The incentive award opportunities noted below are shown as a percentage of base salary. For purposes of the Plan, “base salary” is defined as compensation earned by a participant for services rendered, excluding the following items: profit sharing contributions, discretionary incentive compensation, cash payments received for waiving employer-paid health insurance, cell phone allowances and fringe benefits.

The performance period under the Annual Incentive Plan is the calendar year. However, the administrative procedures necessary to calculate the awards under the Annual Incentive Plan have not yet been completed for 2024. The Company expects to receive the peer group data necessary to calculate the incentive awards (if any) by the end of June 2025. If at least one of the applicable performance measures is achieved above the threshold performance level, then plan participants will receive a payout under the Annual Incentive Plan at the discretion and, subject to the approval, of the Compensation/Human Resource Committee and/or Board. If our named executive officers receive a payout under the Annual Incentive Plan, the payout will be distributed in cash and, with respect to all of our named executive officers except for Messrs. Black, Wilson, and Jones who has reached retirement eligibility through grants of restricted shares of Company common stock. The total award is dependent upon the executive’s achievement of his performance goals and job position. See “Grants of Plan-Based Awards During 2024” for information on potential payouts under the Annual Incentive Plan.